Travelers 2008 Annual Report Download - page 72

Item 1B. UNRESOLVED STAFF COMMENTS
On July 23, 2004, the Company announced that it was seeking guidance from the staff of the
Division of Corporation Finance of the SEC with respect to the appropriate purchase accounting
treatment for certain second quarter 2004 adjustments totaling $1.63 billion ($1.07 billion after-tax).
The Company recorded these adjustments as charges in its consolidated statement of income in the
second quarter of 2004. Through an informal comment process, the staff of the Division of Corporation
Finance subsequently asked for further information, which the Company provided. Specifically, the staff
asked for information concerning the Company’s adjustments to certain of SPC’s insurance reserves
and reserves for reinsurance recoverables and premiums due from policyholders, and how those
adjustments may relate to SPC’s reserves for periods prior to the merger of SPC and TPC. After
reviewing the staff’s questions and comments and discussions with the Company’s independent auditors,
the Company continues to believe that its accounting treatment for these adjustments is appropriate. If,
however, the staff disagrees, some or all of the adjustments being considered may not be recorded as
charges in the Company’s consolidated statement of income, thereby increasing net income for the
second quarter and full year 2004 and increasing shareholders’ equity at December 31, 2008, 2007,
2006, 2005 and 2004, in each case by the approximate after-tax amount of the change. The effect on
tangible shareholders’ equity (adjusted for the effects of deferred taxes associated with goodwill and
other intangible assets) at December 31, 2008, 2007, 2006, 2005 and 2004 would not be material.
Increases to goodwill and deferred tax liabilities would be reflected on the Company’s balance sheet at
April 1, 2004, either due to purchase accounting or adjustment of SPC’s reserves prior to the merger of
SPC and TPC. On May 3, 2006, the Company received a letter from the Division of Enforcement of
the SEC (the Division) advising the Company that it is conducting an inquiry relating to the second
quarter 2004 adjustments and the April 1, 2004 merger between SPC and TPC. The Company
cooperated with the Division’s requests for information.
Item 2. PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as 191 field
and claim offices totaling approximately 5.3 million square feet throughout the United States under
leases or subleases with third parties. The Company owns six buildings in Hartford, Connecticut. The
Company currently occupies approximately 1.8 million square feet of office space in these buildings.
The Company also owns office buildings located at 385 Washington Street and 130 West Sixth Street,
St. Paul, Minnesota. These buildings are adjacent to one another and consist of approximately
1.1 million square feet of gross floor space. The Company also owns other real property, including
office buildings in Denver, Colorado and Fall River, Massachusetts, as well as a data center located in
Norcross, Georgia.
The Company owns a building in London, England, which houses a portion of its operations in the
United Kingdom.
The Company, through its subsidiaries, owns an investment portfolio of income-producing
properties and real estate funds. Included in this portfolio are four office buildings in which the
Company holds a 50% ownership interest located in New York, New York, which collectively accounted
for approximately 10% of the carrying value of the property portfolio at December 31, 2008.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable
for its business as presently conducted and are adequately maintained.
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